Margins of Indian IT firms under pressure: Nasscom

Margins of Indian IT companies are under pressure due to reasons like global economic turbulence, while there may be a marginal decline in hiring because of increased automation and efficiency, industry body Nasscom said.PTI | August 04, 2016, 08:28 IST

HYDERABAD: Margins of Indian IT companies are under pressure due to reasons like global economic turbulence, while there may be a marginal decline in hiring because of increased automation and efficiency, industry body Nasscom said.

"Companies are quite upbeat about the revenues and prospects, notwithstanding headwinds in different places for different reasons.

"But clearly, there has been a lot of pressure on margins. That is much more visible and much more tangible than the overall revenue trajectory," Nasscom president R Chandrasekhar told reporters on the sidelines of an event here.

"Globally, there has been economic turbulence. Europe had very low level of growth, particularly in southern Europe there has been very low or negative growth...Overall in Europe, the growth is very little," he said.

He said the IT companies which have contracts in pound sterling may see some pressure on the margins due to the decline of the pound after UK voted to exit the European Union.

He added that there may be a slight decline in hiring by IT companies due to increased automation and efficiency levels.

"There is no dramatic change in hiring. But we are seeing gentle decline for a couple of reasons. One is there is automation which is happening within the IT sector," he said.

According to him, the IT and ITES industry provided three million jobs when it reached USD 100 billion in size and it is estimated that it would require about 1.5 million people for the second $100 billion.

Nasscom Chairman C P Gurnani had earlier indicated that there would be a drop of 20 per cent in IT hiring.